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Decoding Compliance

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local edition Or ig i nat ion SECONDARY MARKET 'Too Big to Jail' Remarks Draw Criticism s e c on da r y m a r k e t a na ly t ic s se r v ic i ng The U.S. attorney general was on the hot seat after statements to the Senate indicating special considerations for large financial institutions. District of Columbia // U.S. Attorney General Eric Holder caused a stir by voicing the idea that certain financial institutions may be "too big to jail." In a recent testimony before the Senate Judiciary Committee on Justice Department (DoJ) oversight, Holder addressed concerns from Sen. Chuck Grassley (R-Iowa) regarding the leniency the department has shown certain banks (Grassley specifically cited the treatment of HSBC, which agreed to pay the government $1.9 billion to settle a money laundering investigation). "I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute when we are hit with indications that if we do prosecute and bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy," Holder said. "I think that is a function of the fact that some of these institutions have become too large." He added that their size "has an inhibiting influence, impact on [the DoJ's] to bring resolutions that I think would be more appropriate." On the subject of banks charged with mortgage fraud leading into the financial crisis, however, Holder asserted that the department has been "appropriately aggressive" and noted that "these are not always easy cases to make." "When you look at these cases, you see that things were done 'wrong'; then the question is whether or not they were illegal. And I think the people in our criminal division—the people in our U.S. Attorney's Office in the Southern District 78 | The M Report "I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute when we are hit with indications that if we do prosecute and bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy." —Eric Holder, U.S. Attorney General of New York, for instance—have been as aggressive as they could be, brought cases where we think we could have brought them," the attorney general remarked. "I know that in some cases that has not been a satisfying answer to people, but we have been as aggressive as we could have been." Holder's remarks have already drawn fire from critics who say the Justice Department and the Obama administration haven't been dogged in pursuing the parties they blame for the economic meltdown. One such critic is Sen. Elizabeth Warren (D-Massachusetts), who ruffled feathers at her first Senate Banking Committee hearing in February, when she took regulators to task over their trial records against Wall Street Banks. In a statement released to the Huffington Post, Warren said, "It has been almost five years since the financial crisis, but the big banks are still too big to fail. That means they are subsidized by about $83 billion a year by American taxpayers and are still not being held fully accountable for breaking the law. General Holder's testimony that the biggest banks are too-big-to-jail shows once again that it is past time to end too-big-to-fail." Ally Sells Lending Operations Striking an acquisition deal with Walter Investment, the company heralded the sale of its mortgage business. florida // Walter Investment Management Corp. recently signed a definitive agreement to acquire Ally Bank's business lending operations, the company announced. The transaction was slated to close on February 28, though terms were not disclosed. Walter expects it will employ approximately 300 of Ally's correspondent and wholesale lending employees. "This transaction brings to Walter Investment a team of knowledgeable, experienced employees with which to pursue correspondent lending opportunities, using the outstanding capabilities resident in the recently acquired ResCap originations platform," said Mark O'Brien, chairman and CEO of Floridabased Walter Investment. "We look forward to working with this team as we execute on our strategic plans for the originations business." The deal represents a major step in Ally's ongoing move away from the mortgage business. The bank announced last year its intent to "explore strategic alternatives" for its agency mortgage servicing rights and its business lending operations. "We are pleased to be transferring Business Lending to a well-respected, strategic buyer like Walter, who values the high quality of our people, platform, and relationships and is committed to building its origination capabilities," said Ally Bank president and CEO Barbara Yastine. "This is a positive outcome for our 300 Business Lending employees and enables Ally Bank to direct more resources toward our priorities of growing our leading direct banking franchise, as well as supporting Ally's auto finance operation." As previously announced, Ally Bank will continue to originate "a modest level" of jumbo and conventional conforming home mortgages for its own portfolio through a group of correspondent lenders. Equity Approved for Whole Loan Execution Fannie granted the Southern lender status as

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